MTN Group Limited Financial results for the year ended 31 December 2016

Transcription

1 MTN Group Limited Financial results for the year ended 31 December 2016

2 Contents RESULTS OVERVIEW Highlights 01 Results overview 02 Audited summary consolidated financial statements 31 Independent auditors report on summary consolidated financial statements 32 Summary consolidated income statement 33 Summary consolidated statement of comprehensive income 34 Summary consolidated statement of financial position 35 Summary consolidated statement of changes in equity 36 Summary consolidated statement of cash flows 37 Notes to the summary consolidated financial statements 38 Administration 56 Note: Certain financial information presented in these annual financial results constitutes pro forma financial information. The pro forma financial information is the responsibility of the Group s board of directors and is presented for illustrative purposes only. Because of its nature, the pro forma financial information may not fairly present MTN s financial position, changes in equity, results of operations or cash flows. An assurance report has been prepared and issued by our joint auditors PricewaterhouseCoopers Inc. and SizweNtsalubaGobodo Inc. in respect of the pro forma financial information included in this announcement that is available for inspection at the registered office of the company. 1. The financial information presented in these consolidated financial results has been prepared excluding the impact of hyperinflation and the relating goodwill impairment, tower profits, the Nigerian regulatory fine (consisting of the re-measurement impact when the settlement was entered into and the finance costs recognised as a result of the unwind of the initial discounting of the liability) and the MTN Zakhele Futhi impact (consisting of the share-based payment expense, net of the deferred tax impact recognised by MTN Zakhele Futhi arising on the capital gain on the investment in MTN) and constitutes pro forma financial information to the extent that it is not extracted from the segment disclosure included in the audited financial statements for the year ended 31 December This pro forma financial information has been presented to eliminate the impact of hyperinflation and the relating goodwill impairment, tower profits, the Nigerian regulatory fine (as defined above) and the MTN Zakhele Futhi impact (as defined above) from the financial results in order to achieve a comparable analysis year on year. Hyperinflation adjustments and the relating goodwill impairment, tower profits, the Nigerian regulatory fine (as defined above) and the MTN Zakhele Futhi impact (as defined above) have been calculated in terms of the Group accounting policies disclosed in the consolidated financial statements for the year ended 31 December Constant currency ( organic ) information has been presented to illustrate the impact of changes in currency rates on the Group s results. In determining the change in constant currency terms, the current financial reporting year s results have been adjusted to the prior year s average exchange rates determined as the average of the monthly exchange rates which can be found on investors. The measurement has been performed for each of the Group s currencies, materially being that of the US dollar and Nigerian naira. The organic growth percentage has been calculated based on the current year constant currency results compared to the prior year results. In addition, in respect of MTN Irancell, MTN Sudan, MTN South Sudan and MTN Syria, the constant currency information has been prepared excluding the impact of hyperinflation. In 2015, the Iranian economy was assessed to no longer be a hyperinflationary environment. MTN therefore discontinued hyperinflation accounting in that operation effective 1 July In addition, during 2016, Sudan was no longer considered to be a hyperinflationary economy from 1 July 2016 and hyperinflation accounting was discontinued from this date onwards. The economy of South Sudan was assessed to be hyperinflationary effective 1 January 2016, and hyperinflation accounting was applied for the year ended 31 December * Constant currency ( organic ) information. ** Reported-includes hyperinflation and the relating goodwill impairment, tower profits, the Nigerian regulatory fine (as defined above) and the MTN Zakhele Futhi impact (as defined above). *** The forward-looking financial information disclosed in this results announcement has not been reviewed or audited or otherwise reported on by our external joint auditors. The Group s results are presented on a regional basis in line with the Group s new operational structure. This is comprised of South and East Africa (SEA), West and Central Africa (WECA) and Middle East and North Africa (MENA) and their respective underlying operations further outlined below. The SEA region includes: South Africa, Uganda, Zambia, Rwanda, South Sudan, Botswana (joint venture-equity accounted), Swaziland (joint venture-equity accounted) and Business Group. The WECA region includes: Nigeria, Ghana, Cameroon, Ivory Coast, Benin, Congo Brazzaville, Liberia, Guinea Conakry and Guinea Bissau. The MENA region includes: Iran (joint venture-equity accounted), Syria, Sudan, Yemen, Afghanistan and Cyprus. Although Iran, Botswana and Swaziland form part of their respective regions geographically and operationally, they are excluded from their respective regional results due to being equity accounted for by the Group.

3 RESULTS OVERVIEW Group subscribers increased by 3,3% to 240,4 million Revenue increased marginally by 0,4% (2,9%*) to R million Data revenue increased by 16,7% (19,7%*) to R million Voice traffic decreased by 1,7% and data traffic increased by 143% EBITDA decreased by 13,2% (18,5%*) to R million EBITDA margin decreased by 5,5 percentage points to 35,4% Headline loss per share of 77 cents** Final dividend of 450 cents per share Capex increased by 19,6 (28,7%*) to R million Repatriated R6 308 million ( 425 million) from MTN Irancell up to 31 December 2016, being the entire amount due under the loan advanced for the licence fee in 2005 Subsequent to year end, the operational dividends of the last five years presently due to MTN were paid by MTN Irancell totalling 468 million. This brings the total repatriation to 893 million MTN Group Limited financial results for the year ended 31 December

4 Results overview OVERVIEW MTN Group s financial results for 2016 reflect the most challenging year in the company s 22-year history, precipitated by a number of material regulatory, macro-economic and political challenges experienced across our regions. However, despite these difficulties, the business began to show encouraging first signs of a turnaround. Following the conclusion of the settlement agreement relating to the Nigerian regulatory fine in June 2016, the infusion of new senior management and the appointment of a new Group Chief Executive Officer (CEO) commencing on 13 March 2017, the MTN board of directors (Board) undertook a deep and fundamental strategic review of the business and its processes to ensure MTN is operating far more optimally in a complex and difficult operating environment. The outcome of this review illuminated areas of the business which required urgent attention. It also highlighted the company s unique position in a fast moving industry. As a result, the company embarked on a transformation initiative, IGNITE, designed to optimise its operations and position the Group most favourably to participate in a rapidly evolving sector. Much of 2016 was consumed with putting in place corrective measures to ensure the delivery of the company strategy. Towards the end of 2016, our two largest operations and some of the tier two operations began to show signs of a turnaround following an extended period of underperformance. As previously reported, MTN South Africa delivered a sub-optimal result in the first six months of 2016, with network, systems and customer service challenges. While all these issues were not fully resolved during the second half of 2016, MTN South Africa showed strong improvements in network quality and capacity. The operation significantly increased its net promoter score (NPS) particularly in the fourth quarter where it increased its NPS by 8 percentage points (pp) to 81% when compared to the same period in MTN South Africa s earnings before interest, tax, depreciation, amortisation, impairment of goodwill, net monetary gains and share of results of joint ventures and associates after tax (EBITDA) in the second half of the year increased by 31,0% (excluding the MTN Zakhele Futhi share-based payment expense) compared to the first six months of the year. Despite the impact of regulatory challenges and a disadvantaged competitive position in Nigeria, the result of subscriber disconnections and the withdrawal of regulatory services in the first half of the year, Nigeria continued to improve its competitive position throughout the year. While revenue declined 6,3%* in the first quarter of 2016 when compared to the same quarter in 2015, revenue growth improved steadily throughout the year and fourth quarter revenue increased by 4,0%* year-on-year (YoY). This was attributable to improved network quality and attractive value propositions. This trend continued in early 2017, with revenue in January 2017 up by approximately 16%* YoY as the business continued to regain lost market share. We expect YoY growth to be maintained for the month of February 2017***. NPS more than doubled in the fourth quarter of 2016 when compared to the same period in However, the depreciation of the naira against the US dollar negatively impacted EBITDA margin and drove US dollar-linked costs higher. MTN Irancell and MTN Ghana reported a strong performance driven by data revenue growth. MTN Irancell benefited from the country s youthful demographics and higher smartphone penetration while MTN Ghana s data revenue growth was attributable to low-cost smartphones sold following the successful launch of its 4G network. Group data revenue increased 19.7%* YoY contributing 27% of 02 MTN Group Limited financial results for the year ended 31 December 2016

5 RESULTS OVERVIEW total Group revenue. This was supported by the Group s strategic decision to accelerate network investment across our markets, particularly South Africa, Nigeria and Iran. This investment will be critical in supporting the anticipated growth in data revenue. MTN Uganda, MTN Cameroon and MTN Ivory Coast showed improved momentum towards the fourth quarter of 2016 following a competitive environment and subscriber registration challenges in the first half of the year. Group revenue was negatively impacted by the depreciation of the rand against the US dollar as well as lower-than-expected top-line growth in Nigeria and South Africa. Revenue increased marginally to R million while organic revenue increased 2,9%*. The Group s NPS improved from 24% in December 2015 to 35% in December 2016, closing the gap with its competitors. This was mainly driven by improvement on the network, value offerings and brand image. The Group reported a number of once-off costs, which negatively impacted Group EBITDA. These costs include the Nigerian regulatory fine of R million**; professional fees related to the settlement of the Nigerian regulatory fine of R1 324 million**; MTN Zakhele Futhi share-based payment expense of R1 008 million**; the impairment of property, plant and equipment in South Sudan of R295 million (R2 679 million*) and Project Winback, relating to the reconnection of subscribers in Nigeria of R530 million**. As a result of these once-off costs, EBITDA declined by 31,1%** to R million**. Excluding the impact of hyperinflation and the relating goodwill impairment, tower profits, the Nigerian regulatory fine and the MTN Zakhele Futhi share-based payment expense, EBITDA declined 13,2%. Reported basic headline earnings per share (HEPS) declined by 110%** to a loss of 77 cents**. This was significantly impacted by the Nigerian regulatory fine, which had a 500 cents negative impact on HEPS. 455 cents was non-recurring and 45 cents related to the interest unwind of the fine. In addition, HEPS was negatively impacted by: Foreign exchange losses of 329 cents; Losses from MTN s 51% equity interest in Nigeria Tower InterCo B.V., of 122 cents mainly as a result of unrealised foreign exchange losses on US dollar-denominated loans (non-recurring from 1 February 2017 when MTN exchanged its 51% interest in Nigeria Tower InterCo B.V., for an increased stake in IHS Holdings Limited, now at approximately 29%); The MTN Zakhele Futhi impact of 88 cents; Professional fees related to the settlement of the Nigerian regulatory fine of 73 cents (nonrecurring); Losses from our investments in Digital Group, mainly including Africa Internet Holdings (AIH), Middle East Internet Holdings (MEIH) and Iran Internet Group (IIG) of 39 cents; and Hyperinflation of 37 cents. MTN repatriated R6 308 million ( 425 million) from MTN Irancell up to 31 December 2016, being the entire amount due under the loan advanced for the licence fee in Subsequent to year end, the operational dividends of the last five years presently due to MTN were paid by MTN Irancell totalling 468 million. This brings the total repatriation to 893 million. In 2015, MTN converted a portion of the MTN Group Limited financial results for the year ended 31 December

6 Results overview continued dividends due to an interest-bearing loan, totalling 135 million (at the 2016 year end closing exchange rate). This loan is due for settlement on 30 September This will substantially close the matter on the long outstanding payments due from MTN Irancell. In addition, to meet our ongoing capex and working capital requirements we successfully refinanced maturing facilities and secured additional long-term financing facilities from local and international sources, including a US$1 billion international debt capital market issuance. This activity aided in diversifying our sources of funding, improving our debt maturity profile and giving us access to sufficient liquidity to speedily respond to the ongoing needs of the business. OUR OPERATING CONTEXT In 2016, the Group continued to operate in a challenging environment. Global economic growth slowed, particularly in sub-saharan Africa where many countries rely on commodity exports. At the end of 2016, the oil price was 50% higher than at the same time a year earlier. Nigeria is yet to reap the full benefit of the stronger price. Iran, however, did benefit from the firmer price and higher crude output and exports, with the economy growing 4,5% in 2016 from 0,8% in In South Africa, gross domestic product (GDP) was broadly flat at 2015 s levels. Weak economic conditions across our footprint resulted in volatile currencies, precipitating higher foreign-denominated expenses as well as forex losses for the Group in the reporting period. The contraction of the Nigerian economy impacted consumer spending in that country, and had a knockon effect on the rest of West Africa, notably Cameroon and Benin. Many governments implemented policy changes in response to lower commodity revenues, and regulatory pressures continued to increase. SIM-card registration requirements, additional taxes in some markets and the obligation to list and/or localise subsidiaries were also features of the year. In South Africa, there were further delays in the awarding of spectrum and in Nigeria, the regulator s 2013 ruling declaring MTN a dominant operator and the consequential restrictions continued to impact our commercial success. In the quarterly update for the period ended 30 September 2016 published on SENS on 24 October 2017 MTN advised shareholders that the Central Bank of Nigeria instructed various banks in Nigeria to suspend any remittance of dividends by MTN Nigeria Communications Limited, until further notice. MTN is pleased to advise that the Central Bank of Nigeria has now lifted the aforesaid suspension. The industry continued its rapid evolution in both the traditional connectivity business as well as in non-traditional businesses such as mobile financial services and content-based services. Competition in the price of voice and data services intensified as economies were under pressure and more consumers used over-the-top services. This depressed traditional revenue streams. 04 MTN Group Limited financial results for the year ended 31 December 2016

7 RESULTS OVERVIEW IMPLEMENTING MEASURES TO DELIVER ON STRATEGY With a settlement agreement having been reached with the Nigerian regulatory authority in respect of the fine, MTN spent much of 2016 implementing corrective measures to facilitate the delivery of an effective and efficient strategy. We embarked on a wide-ranging strategic review of our operations and processes to ensure that we execute our strategy far more optimally. The outcome of the review prompted us to focus on four key areas: our transformation initiative; accelerating the growth of new revenue streams; finalising the appointment of senior management; and including a more diverse skill set on the Board. The launch of IGNITE our transformation initiative At the end of 2016, we launched IGNITE our transformation initiative, starting with our two biggest operations, MTN South Africa and MTN Nigeria. IGNITE is about shaping the future of MTN, by proactively introducing special measures to accelerate our business and financial performance. These measures, which have aggressive targets, will make our organisation more agile, and our business more sustainable, efficient, innovative and profitable. IGNITE will be rolled out progressively to all operations. The programme will ensure a well-coordinated approach throughout MTN, enabling operations to execute their mandates effectively and deliver excellence in customer experience and value propositions. Through IGNITE, we aim to: create a path to accelerate our revenue growth; translate a greater percentage of our revenue into EBITDA and profit; improve the quality and effectiveness of our processes; deploy our capital more effectively; use more advanced data analytics to better inform our decision making, particularly around customers and network deployment; accelerate the diversification of revenue streams; focus on customer experience; and ensure these changes are sustainable by striking the right balance between performance and the health of our organisation. Our new Group transformation office is overseeing transformation offices in South Africa, Nigeria and globally, ensuring the implementation of all related initiatives and enablers, and reporting directly to a Group transformation board, chaired by the President and CEO. MTN Group Limited financial results for the year ended 31 December

8 Results overview continued Digital We recorded strong growth of 44,2% in digital services revenue, supported by our lifestyle and mobile financial services offerings. MTN Mobile Money accounts for 20,2% of total digital revenue. MTN Games Club, our premium gaming proposition, grew significantly in the three largest markets and is now active in nine markets with a total of 5,4 million subscribers. We continued to be a leading distributor of digital music in Africa: our music streaming product recorded 4,0 million paying subscribers. The number of MTN Mobile Money registered customers grew by 18,4% to 41 million, supported by a strong performance from MTN Ghana and MTN Benin. The number of 30-day active customers increased by 55,3% to 15,4 million across 15 countries. MTN Mobile Money revenue increased by 50,7%* to R2 829 million off the 2015 base. Five operations (compared to two in 2015) had over a million active customers each. This is a critical tipping point for the product. We continued to focus on advanced financial services such as remittances (28 corridors have been established), micro-lending and savings offerings. We launched MoKash, an extension to the MTN Mobile Money wallet, in Uganda and Zambia, where there are over 1,5 million registered customers. Loans are financed by our lending partner the Commercial Bank of Africa (CBA) and the role of MTN is to market, originate and disburse the loans and collect the loan repayments using MTN Mobile Money. After launching in Uganda in August 2016, over loans were disbursed in the month of December We are planning further pilots in Rwanda, Ivory Coast and Ghana. At year end, we had approximately active MTN Mobile Money financial services agents in Uganda. Monthly airtime sales through the MTN wallet peaked in December 2016, demonstrating a lower cost distribution channel for core products. Ayo, our joint venture with MMI Holdings Limited, soft launched two mobile micro-lending products in Uganda in the year. Jumia (the unified brand of our e-commerce joint ventures AIH) and MEIH, experienced slower growth in the Africa business largely on the back of Nigeria s slowing economy. Despite this, by entering new markets like Morocco and Ivory Coast, it was able to deliver nominal growth. MEIH continued to exhibit double-digit monthly percentage growth in revenue and customer numbers across all business lines. Unit economics in both AIH and MEIH continued to improve. In the year, Jumia recorded approximately 3,2 million customers, 5,9 million transactions and 2,8 million leads on its classifieds business, which expanded to eight new countries. MEIH, made up of seven companies in the Middle East, had approximately customers and 3,3 million transactions during the period. Iran Internet Group (IIG), our Iranian e-commerce business that has become the largest business of its kind in Iran, gained strong momentum. It showed very strong growth across its portfolio of 06 MTN Group Limited financial results for the year ended 31 December 2016

9 RESULTS OVERVIEW e-commerce companies, expanding 40 times in the period under review. Zoodfood, a restaurant delivery service app, grew by 400% in 2016 to achieve 85% market share. Snapp, a taxi hailing app with 85% market share, and an average of approximately rides a day. It is the largest e-commerce company in Iran by revenue, in spite of being active only in Tehran. Expansion to other cities is currently under way. Bamilo, Iran s largest online mall and marketplace, grew 60% in the fourth quarter of It has over stock keeping units and hosts merchants with online stores. The TravelStart business, in which MTN acquired a 39,2% indirect interest through Amadeus, recorded bookings from clients during the period. MTN continues to bolster its compliance framework associated with our financial services business. Enterprise Business Unit (EBU) Operating in a tough economic environment, customers focused on optimising operational efficiencies, which resulted in a consolidation of accounts. However, this presented opportunities for our EBU to explore and generate new revenues. In line with the Group strategy to accelerate growth in this area, we appointed a new executive head of Group EBU, Oliver Fortuin, who joined MTN on 1 March Oliver will assist to formulate a more competitive business strategy for this area. Investments in towers During January 2017, MTN exchanged its 51% share of Nigeria Tower InterCo B.V. (the parent of Nigerian telecoms tower operator INT Towers Limited) for an increased stake in IHS Holdings Limited (IHS). MTN s stake in IHS increased to approximately 29% from approximately 15%. IHS is the largest independent tower operator in Africa and the Middle East with over towers. This transaction enables MTN to simplify its tower ownership structure and diversify its exposure to tower infrastructure across the IHS Group. Through this transaction (and with effect from 1 February 2017), MTN will no longer equity account for INT. In addition, this exchange allows MTN to benefit economically from its previously owned passive infrastructure and continued network investment. Senior management changes In the year, we appointed a number of new senior executives with the requisite skills to take MTN into a new growth phase. We also reinstated the regional vice president positions to ensure an extra layer of regional, operational and governance oversight. These appointments position the Group to capitalise on its many prospects and reach its full potential in a rapidly transforming and exciting sector. At an opco level, we reviewed structures, introducing the position of chief operating officer in our large opcos to ensure that increased operational oversight and coordination between commercial and technical teams is enhanced, allowing country CEOs to focus on stakeholder matters. MTN Group Limited financial results for the year ended 31 December

10 Results overview continued At a Group level, the MTN executive committee is made up of: Phuthuma Nhleko, who is executive chairman in an interim capacity and will hand over to the incoming Group President and CEO, Rob Shuter, on 13 March 2017, after which Phuthuma will revert to his role as non-executive chairman for a maximum period of two years (until no later than December 2018) when he plans to step down. Rob Shuter, who will assume his position as Group President and CEO on 13 March Rob brings extensive experience in the telecoms sector in both Africa and Europe as well as in financial services. Ralph Mupita, who will commence duty on 3 April 2017 as Group Chief Financial Officer and executive director of the Group Board. Ralph brings 16 years of financial services experience as well as expertise in engineering. Gunter Engling, currently Acting Chief Financial Officer, will assume the position of Deputy Chief Financial Officer, with effect from 3 April 2017, reporting to Ralph. Jens Schulte-Bockum, who joined the Group on 16 January 2017 as Group Chief Operating Officer. Jens has extensive operational experience in the telecoms sector and succeeded Jyoti Desai, who is retiring. We would like to thank Jyoti for her extensive contribution to the Group. Godfrey Motsa, Vice President for the South and East Africa region. Executive of the region including MTN South Africa since January 2017, Godfrey brings 10 years of emerging markets telecoms experience. Mteto Nyati, CEO of MTN South Africa since Mteto joined the Group as executive for the Enterprise Businesses unit in Ismail Jaroudi, Vice President for the Middle East and North Africa region since He previously held many other senior roles within the Group and its operations. Karl Toriola, Vice President for the West and Central Africa region since He previously held many other senior roles within the Group and its operations. Ferdi Moolman, CEO of MTN Nigeria since He previously held many other senior roles within the Group and its operations. Stephen van Coller, Vice President for Strategy and Mergers and Acquisitions (M&A) since October Stephen brings substantial commercial and financial services experience. Paul Norman, Chief Human Resources and Corporate Affairs Officer since Michael Fleischer, Chief Legal Counsel since Michael has significant legal experience in the fields of M&A, regulation and compliance and commercial transactions. Other senior executives who were appointed in 2016 include: Babak Fouladi as Chief Technology and Information Officer. Bernice Samuels as Executive: Marketing. Felleng Sekha as Executive: Regulatory Affairs and Public Policy. Oliver Fortuin as Executive: Business Enterprise. Riaan Wessels as Executive: Business Risk Management. Saim Yaksan as Executive: Group Transformation Gunter Engling as Deputy CFO 08 MTN Group Limited financial results for the year ended 31 December 2016

11 RESULTS OVERVIEW Board refresh The Group also refreshed the composition of the Group Board and MTN South Africa Board, providing more in-depth commercial, risk and governance skills and experience. Specifically, the following individuals were appointed to the Board as independent non-executive directors effective 1 August 2016: Stan Miller has global experience in expanding businesses into new markets, exposure to convergence, as well as strong business and operational acumen. His telecoms experience ranges from co-founding subscription television channel M-Net, to leading the growth of the Dutch telecoms company KPN in the Netherlands. He is the executive chairman of AINMT A.B. Sweden and a non-executive member of the board of MTS JSC. Russia, a telecommunications operator in Russia. Paul Hanratty brings a wealth of experience in financial services in the UK, US, Africa, Asia and Latin America. He worked at Old Mutual for over 30 years and sat on the boards of various other financial services companies. Paul has extensive M&A experience and has devised and implemented growth strategies for businesses in many countries. Nkululeko Nkunku Sowazi is the chairman of Kagiso Tiso Holdings, a leading South African investment holding company, with significant interests in the media, financial and industrial sectors. Nkunku was the executive chairman and co-founder of the Tiso Group and is currently a director of Grindrod Limited and a non-executive director of listed and unlisted organisations spanning Ghana, the UK, the US and South Africa. Nkunku has had significant exposure to listed and nonlisted boards and has extensive experience in M&A and investment management. He sat on the remunerations, nominations audit and risk committees at Exxaro and Aveng. Johnson Njeke and Jan Strydom, who both served on the Board for an aggregate period in excess of nine years each, resigned at the Group Annual General Meeting in May The Board thanks them for their valuable contribution over the years. PROSPECTS The MTN Group continues to work towards achieving our vision of leading the delivery of a bold, new Digital World to our customers. Despite the recent disruptions in the markets in which we operate, Africa is still expected to be a key growth region over the medium to long term. MTN s unique position in Africa and the changes made in 2016 provide a solid platform for the Group to realise its vision. The management team will continue to execute on IGNITE, focusing mainly on the transformation of MTN s operating model and accelerating growth of new revenue streams. With a strengthened management team in place and new initiatives embarked upon, we are confident and are resolved to enhance our competitive position across our markets and meet the aggressive targets set. New revenue streams, particularly digital services, are expected to increase their contribution over the next 18 months, supported by a more focused approach and the process initiated to establish an advanced analytics unit. We expect our e-commerce joint ventures with AIH, MEIH and IIG to continue strong growth in customers and revenue, with improving unit economies. While AIH and MEIH are expected to be impacted by a slowing economy and the associated volatility of currencies in Nigeria and Egypt, IIG is expected to benefit from improving GDP growth. MTN Group Limited financial results for the year ended 31 December

12 Results overview continued Our extensive capex investments made over the past two years across our operations will enable the business to provide superior customer experience and competitive data network. This will support the increasing demand for data and digital services. MTN Nigeria continues to make progress with its preparations to list MTN Nigeria shares on the Nigerian Stock Exchange. In addition to setting up a management task team, MTN Nigeria has appointed a lead issuing house, joint transaction advisors, global coordinators and legal advisors. While MTN remains committed to the listing, it is subject to suitable market conditions, macroeconomic conditions. The listing is also subject to securing the appropriate approvals and certainty from relevant regulators and other stakeholders. MTN Ghana is working with relevant regulators on its localisation transaction, which is expected to be completed during the course of In Nigeria, we expect to further improve our competitive position despite a weaker economic environment. Network quality remains a priority. This improvement in competitive position, improved network quality and capacity, smartphone penetration and increased focus on new revenue streams are expected to support upper single-digit top-line growth***. We will continue to work closely with vendors to alleviate the current challenges with regard to the availability of US dollars. We expect the depreciation of the naira against the US dollar to negatively impact the EBITDA margin in 2017 and 2018***. However, IGNITE initiatives to be implemented over the next two years will partly offset the drag on reported EBITDA by 15 to 20% by 2018***. We anticipate a positive growth trend in South Africa. In 2017, we expect mid-single-digit revenue growth and EBITDA margin expansion of between 50 and 100 basis points (bp) YoY*** supported by a strong focus on customer service, improved billing, significantly improved network quality, capacity and speed. A stronger network will facilitate greater customer retention. Cost optimisation and outsourcing of non-core functions will also support EBITDA growth. Through IGNITE, we expect an improvement in reported EBITDA of the 2016 base of between 15% and 20% by the end of 2018***. Going forward, the repatriation of monies from MTN Irancell is expected to be normalised. We expect growth in the Iranian economy (following the easing of sanctions) to offer significant opportunities to expand our services, particularly in the digital space, and to benefit further from MTN s strong position and the country s youthful population. We will continue to review infrastructure investment opportunities, including Iran. DIVIDENDS The Board has declared a second half dividend of 450 cents per share, which will bring the total dividend for 2016 to 700 cents per share. At the discretion of the Board and taking into consideration market conditions, the Board anticipates declaring a total dividend of 700 cents per share*** during FY2017. The expected FY2017 dividend takes into consideration the continued uncertainty of the regulatory environments and dollar liquidity situation across many of our markets as well as the interest of the company s shareholders and lenders. 10 MTN Group Limited financial results for the year ended 31 December 2016

13 RESULTS OVERVIEW Subscriber Net Additions ( 000) Actual Guidance SEA South Africa Uganda Other WECA Nigeria Ghana Cameroon Ivory Coast Other (263) MENA Iran Syria 95 (250) Sudan (972) 500 Other Total CAPITAL EXPENDITURE ZAR (million) Authorised 2016 Capitalised December 2016 Capitalised December 2015 SEA South Africa Uganda Other WECA Nigeria Ghana Cameroon Ivory Coast Other MENA Syria* Sudan* Other Head office companies and eliminations Total Hyperinflation Total reported Iran (49%)* *Excluding hyperinflation MTN Group Limited financial results for the year ended 31 December

14 Results overview continued FINANCIAL REVIEW RECONCILIATION OF PRO FORMA FINANCIAL INFORMATION ZAR (million) Actual 2016 Hyperinflation (1) Tower profit (2) Zakhele Futhi impact (3) Nigeria regulatory fine (4) Actual 2016 adjusted Revenue Other income EBITDA (1 008) (10 499) Depreciation, amortisation and impairment of goodwill Profit from operations (545) 31 (1 008) (10 499) Net finance cost (228) Share of results of joint ventures and associates after tax (127) (1 851) Monetary gain/(loss) Profit/(loss) before tax (445) 31 (1 008) (11 543) Income tax expense Profit/(loss) after tax (3 103) (480) 31 (1 601) (11 543) Non-controlling interests (489) 195 (2 444) Attributable (loss)/profit (2 614) (675) 31 (1 601) (9 099) EBITDA margin 27,5% 35,4% Effective tax rate 159,2% 42,4% (1) Represents the exclusion of the impact of hyperinflation and related goodwill impairment for certain of the Group s subsidiaries (MTN Syria, MTN South Sudan and MTN Sudan) and the Group s joint venture in Iran, being accounted for on a hyperinflationary basis in accordance with International Financial Reporting Standards (IFRS) on the respective financial statement line items affected. During 2015, the Iranian economy was assessed to no longer be hyperinflationary and hyperinflation accounting was discontinued effective 1 July The economy of Sudan was assessed to no longer be hyperinflationary effective 1 July 2016 and hyperinflation accounting was discontinued from this date onwards. The economy of South Sudan was assessed to be hyperinflationary effective 1 January 2016 and hyperinflation accounting was applied for the year ended 31 December (2) Represents the exclusion of the financial impact relating to the sale of tower assets during the financial year on the respective financial line items impacted, which include: Tower sale profits for the year related to the Ghana release of deferred profit of R31 million (2015: Nigeria tower profit of R8 233 million and Ghana release of deferred gain of R30 million). (3) Represents the IFRS 2 Share based payment impact of MTN Zakhele Futhi. MTN made a public offer of ordinary shares to qualifying BEE investors. The Group recognised an IFRS 2 Share-based payment expense of R1 008 million and a tax expense of R593 million. The deferred tax expense is recognised by MTN Zakhele Futhi mainly in respect of the capital gain on the investment in MTN and is not eliminated on consolidation. 12 MTN Group Limited financial results for the year ended 31 December 2016

15 RESULTS OVERVIEW Actual 2015 Hyperinflation (1) Tower profit (2) Nigeria regulatory fine (4) Actual 2015 adjusted Adjusted change % (9 287) (13) (242) (9 287) (29) (1 768) (42) NM (667) (9 287) (50) (707) (35) (758) (9 287) (57) (1 966) (46) (989) (7 321) (59) 40,2% 40,9% (5,5)pp 32,4% 32,6% 9,8pp (4) Represents the impact of the Nigerian regulatory fine subsequent to conclusion of the settlement agreement during 2016 on the respective financial line items impacted, which include: The re-measurement impact when the settlement agreement was entered into on 10 June 2016, constituting the difference between the balance of the provision recorded on this date (after taking into account finance cost accrued from the beginning of the financial year up to 9 June 2016) and the present value of the financial liability arising on this date in accordance with IFRS (included in the EBITDA line); The finance cost impact recognised as a result of the unwind of the discounting of the provision (for the period from 1 January to 9 June 2016) and the financial liability (for the period from 10 June 2016 to reporting date). Additional depreciation from hyperinflation adjustments related to the unwind of Sudan assets historically written up. R223 million of the goodwill impairment recognised in relation to MTN Syria relates to the previously recorded hyperinflation uplift. MTN Group Limited financial results for the year ended 31 December

16 Results overview continued REVENUE Table 1: Group revenue by country Actual (Rm) Prior (Rm) Reported % change Organic % change Contribution to revenue % SEA ,4 7,9 35,5 South Africa ,7 4,7 28,5 Uganda ,2 (1,9) 3,7 Other (23,7) 36,6 3,3 WECA (1,0) (0,3) 54,9 Nigeria (9,3) (1,4) 32,1 Ghana ,2 19,8 7,0 Cameroon ,6 (6,7) 4,2 Ivory Coast ,7 (2,0) 4,9 Other ,4 (6,2) 6,7 MENA ,8 3,8 9,7 Syria (18,5) 20,3 1,4 Sudan ,1 18,8 3,1 Other (1,4) (8,6) 5,2 Head office companies and eliminations (191) (275) Total ,4 2,9 100,0 Hyperinflation Total reported ,6 2,0 100,0 Group revenue increased marginally to R million. Revenue growth was impacted by the depreciation of the rand and the significant depreciation of the naira against the US dollar, particularly in the second half of 2016 (average exchange rate for the period). The average naira depreciated by 19% against the US dollar and was 36% down against the US dollar at 31 December 2016 when compared to The average rand weakened by 16% against the US dollar, 6% against the Iranian rial, 10% against the Ghanaian cedi, 14% against the Central African franc, 8% against the Ugandan shilling and 9% against the Sudanese pound. The rand, however, strengthened 17% against the Nigerian naira and 50% against the Syrian pound. 14 MTN Group Limited financial results for the year ended 31 December 2016

17 RESULTS OVERVIEW On an organic basis, Group revenue increased by 2,9%*. WECA s revenue decreased by 0,3%* and remained the largest contributor to total Group revenue at 55% at the end of December SEA grew revenue by 7,9%* and contributed 36% to total Group revenue while MENA increased revenue by 3,8%* to contribute 10% to total Group revenue. MTN s top line was negatively impacted by a decline in revenue in Nigeria (down 1,4%*), Cameroon (down 6,7%*), Ivory Coast (down 2,0%*) and Uganda (down 1,9%*). This was mainly as a result of regulatory challenges including the disconnection of subscribers as well as aggressive competition in the first half of the year. However, these declines were partly offset by growth of 4,7% and 19,8%* in revenue in South Africa and Ghana respectively. MTN South Africa s increase was driven by higher handset sales and data revenue, which benefited from improved network quality, particularly in the second half. MTN Sudan and MTN Syria also made a contribution to total Group revenue growth, and increased their revenue by 18,8%* and 20,3%* respectively. Table 2: Group revenue analysis Actual (Rm) Prior (Rm) Reported % change Organic % change Contribution to revenue % Outgoing voice (5,7) (3,6) 54,6 Incoming voice (5,6) (2,3) 9,4 Data ,7 19,7 26,9 SMS (20,9) (20,0) 2,2 Devices ,7 21,5 5,5 Other ,4 12,0 1,4 Total ,4 2,9 100,0 Hyperinflation Total reported ,6 2,0 100,0 MTN Group Limited financial results for the year ended 31 December

18 Results overview continued Total outgoing voice revenue declined 3,6%* to contribute 55% to total Group revenue and incoming voice revenue declined 2,3%* and contributed 9% to total Group revenue. While average voice traffic decreased 1,7%, the Group US dollar effective voice tariff in constant currency terms declined 14,3%*. This was largely due to price competition across markets and a tough economic environment. Table 3: Data revenue by country Actual (Rm) Prior (Rm) Reported % change Organic % change SEA ,2 14,5 South Africa ,4 11,4 Uganda ,1 18,8 Other (3,7) 32,8 WECA ,0 22,8 Nigeria (1,7) 10,8 Ghana ,4 65,7 Cameroon ,6 25,9 Ivory Coast ,7 18,4 Other ,9 39,7 MENA ,9 33,9 Syria (14,1) 26,9 Sudan ,8 56,6 Other ,0 21,8 Head office companies and eliminations (114) (100) Total ,7 19,7 Hyperinflation Total reported ,8 18,9 Data revenue increased by 19,7%* to contribute 27% to total Group revenue. Data revenue growth was supported by strong growth in most markets benefiting from significantly improved 3G and LTE network quality. Data traffic increased 143% while the effective data tariff declined 56,1%* (in constant currency US dollar terms). Digital revenue contributed 36% to total Group data revenue. This was supported by increased smartphone penetration and our expanded digital services offerings in the year. Device revenue increased 21,5%* and contributed 6% to total Group revenue. The remaining 4% of total Group revenue comprised SMS and other revenue. SMS revenue decreased 20,0%*. 16 MTN Group Limited financial results for the year ended 31 December 2016

19 RESULTS OVERVIEW COSTS Table 4: Cost analysis Actual (Rm) Prior (Rm) Reported % change Organic % change % of revenue Handsets and other accessories ,3 15,2 8,3 Interconnect ,9 4,6 8,4 Roaming ,5 14,2 0,6 Commissions (2,2) (0,1) 6,6 Government and regulatory costs (12,0) (6,9) 3,4 VAS/digital revenue share ,2 35,4 2,6 Service provider disc ,9 4,1 1,3 Network ,1 34,7 15,8 Marketing ,0 2,2 2,5 Staff costs ,7 11,8 6,2 Other OPEX ,9 41,8 8,9 Total ,8 17,7 64,6 Regulatory fine MTN Zakhele Futhi impact Hyperinflation Total reported ,4 25,2 72,5 Group operating costs excluding the impact of the Nigerian regulatory fine, hyperinflation, tower profits and the MTN Zakhele Futhi share-based payment expense, increased 9,8% to R million. On an organic basis, total Group costs increased by 17,7%*. Once-off costs included in organic EBITDA include professional fees of R1 324 million** incurred, relating to the negotiations that led to the reduction of R34 billion in the Nigerian regulatory fine, Project Winback costs, relating to the reconnection of subscribers in Nigeria of R535 million* and a property, plant and equipment (PPE) impairment charge in South Sudan of R2 679 million*. WECA increased its costs by 11,4%* and contributed 50% to total Group costs while SEA increased its costs by 23,5%* and contributed 38% to total Group costs. MENA increased costs by 2,1%* and contributed 10% to total Group costs. Head office costs contributed 2% to total Group costs. The increase in total costs was mainly as a result of foreign-denominated expenses following the depreciation of local currencies against the US dollar, particularly in MTN Nigeria where costs increased 15,1%*. MTN South Africa costs were 5,4% higher as a result of higher subsidies on devices mainly in the first half of the year as well as costs associated with aggressive network rollout and increased staff costs. Total direct network operating costs increased 34,7%* and contributed 25% to total costs. This was due to the increase in the number of sites rolled out as well as the US dollar-linked tower leasing costs MTN Group Limited financial results for the year ended 31 December

20 Results overview continued incurred in Nigeria. Device costs increased by 15,2%* and contributed 13% to total costs mainly driven by South Africa s increase in device sales. Interconnect and roaming costs increased 5,2%* and contributed 14% to total costs, while staff costs increased 11,8%* and contributed 10% to total Group costs. Selling, distribution and marketing costs increased by 6,5%* and contributed 20% to total Group costs. This was due to an increase in digital services revenue share agreements entered into with content providers and increased marketing spend in South Africa. Government and regulatory costs declined 6,9%* and contributed 5% to total Group costs, while other operating costs increased 41,8%* and contributed 14% to total Group costs. Other operating expenses include the impairment of PPE in South Sudan of R2 679 million* and professional fees incurred at a headoffice level mainly relating to the negotiation of the settlement of the Nigerian regulatory fine. We expect to improve cost optimisation through IGNITE initiatives over the next two years. EBITDA Table 5: Group EBITDA by country Actual (Rm) Prior (Rm) Reported % change Organic % change SEA (3,2) (23,9) South Africa ,3 3,3 Uganda (8,7) (16,3) Other (46,6) (238,6) WECA (13,3) (13,6) Nigeria (20,5) (16,1) Ghana ,9 21,8 Cameroon (1,7) (16,2) Ivory Coast ,3 (8,3) Other (16,4) (30,4) MENA ,7 7,5 Syria ,8 123,2 Sudan ,0 9,6 Other (5,7) (13,6) Head office companies and eliminations (2 089) 575 Total (13,2) (18,5) Regulatory fine (10 499) (9 287) Hyperinflation Tower profits MTN Zakhele Futhi impact (1 008) Total reported (31,1) (31,1) 18 MTN Group Limited financial results for the year ended 31 December 2016

21 RESULTS OVERVIEW Group EBITDA decreased 13,2% to R million while EBITDA on an organic basis declined 18,5%*. WECA EBITDA declined by 13,6%* and contributed 64% to total EBITDA. SEA s EBITDA decreased by 23,9%* and contributed 32% to EBITDA while MENA increased EBITDA by 7,5%* and contributed 9% to total EBITDA. Head office negatively impacted EBITDA by 4,0%. Organic EBITDA was negatively impacted by once-off costs, foreign-denominated expenses in MTN Nigeria and device costs in MTN South Africa. Total Group EBITDA was supported by MTN Ghana (up 21,8%*), MTN Syria (up more than 100%*) and MTN Sudan (up 9,6%*). This was attributable to positive revenue growth and good cost optimisation. Excluding the impact of the Nigerian fine, tower profits, MTN Zakhele Futhi share-based expense and hyperinflation, the Group recorded a 5,5 pp decline in its EBITDA margin to 35,4%. DEPRECIATION, AMORTISATION AND IMPAIRMENT OF GOODWILL Table 6: Group depreciation and amortisation Actual (Rm) Prior (Rm) Depreciation Reported % change Organic % change Actual (Rm) Amortisation Prior Reported (Rm) % change Organic % change SEA ,6 23, ,5 14,2 South Africa ,2 31, ,9 9,9 Uganda ,1 4, ,8 27,8 Other (29,2) (10,3) ,4 34,8 WECA (1,7) ,7 32,8 Nigeria (11,6) (4,2) ,5 50,1 Ghana (7,0) (13,8) ,6 32,5 Cameroon ,4 15, ,6 27,7 Ivory Coast ,7 28, (29,8) (50,2) Other ,2 (11,7) ,7 18,7 MENA ,0 14, ,5 72,5 Syria ,5 85, (31,1) 1,9 Sudan ,7 19, ,6 11,9 Other ,2 (6,5) ,2 119,5 Head office companies and eliminations Total ,0 8, ,5 31,7 Hyperinflation Total reported ,3 8, ,1 31,3 MTN Group Limited financial results for the year ended 31 December

22 Results overview continued Depreciation increased by 7,0% (8,2%*) to R million, impacted by the aggressive capex programme in Amortisation costs increased by 27,5% (31,7%*) to R4 684 million, driven by higher spend on software in previous years. Impairment of goodwill consisted of impairments in Guinea Conakry (R402 million**), Afrihost (R202 million**) and MTN Syria (R269 million**). NET FINANCE COSTS Table 7: Net finance cost Actual (Rm) Prior (Rm) Reported % change Organic % change % of revenue Net interest paid/ (received) ,1 183,5 2,5 Net forex losses/(gains) ,1 724,9 4,1 Total ,1 437,4 6,6 Nigeria regulatory fine Hyperinflation (228) 5 Total reported ,8 263,7 7,1 Net finance costs amounted to R9 679 million compared to R3 005 million in the previous year. This was mainly due to an increase in net foreign exchange losses to R5 990 million from R1 409 million in the prior period and an increase in net interest paid to R3 689 million from R1 596 million paid in the previous period. The increase in the net interest expense is due to the higher net debt of R million** compared to R million** reported in the previous period. Net foreign exchange losses include: Forex losses in Mauritius of R2 102 million mainly due to the foreign-denominated Iran receivables; Forex losses in Nigeria of R1 786 million incurred on US dollar-denominated third-party borrowings and payables; Forex losses of R819 million in Sudan on foreign-denominated third-party funding and payables; and Forex losses of R626 million in South Sudan as a result of US dollar-denominated third-party trade payables. SHARE OF RESULTS OF JOINT VENTURES AND ASSOCIATES AFTER TAX Joint ventures and associates reported a loss of R127 million** compared to a gain of R1 226 million** in the previous year. This included a charge of R1 853 million incurred by our operation in Iran, mainly relating to the subsequent depreciation and amortisation of previously hyper-inflated assets that were historically written up under hyperinflation reporting. Losses of R2 227 million from MTN s 51% interest in Nigeria Tower InterCo B.V were mainly a result of the foreign exchange unrealised losses (R2 254 million) incurred on US dollar-denominated loans. Short-term losses from Digital Group, mainly AIH, MEIH and IIG, of R706 million also contributed to the overall loss. 20 MTN Group Limited financial results for the year ended 31 December 2016

23 RESULTS OVERVIEW TAXATION Table 8: Taxation Actual (Rm) Prior (Rm) Reported % change Organic % change Contribution to taxation % Normal tax (17,8) (21,8) 109,0 Deferred tax (1 730) 96 (1 902,1) (1 466,3) (22,4) Foreign income and withholding taxes (35,8) (38,0) 13,4 Total (35,3) (35,7) 100,0 Hyperinflation MTN Zakhele Futhi impact 593 Tower profits (707) Total reported (26,3) (27,5) 100,0 The effective tax rate increased to 42,4% from 32,6% in the previous year, impacted by lower profit before tax along with the effects of: Disallowance of deferred tax credits on assessed losses in MTN South Sudan and MTN Guinea Conakry; unproductive interest in MTN Holdings and MTN Mauritius; education tax in MTN Nigeria; additional tax in MTN Ghana, MTN Syria and MTN Yemen; goodwill impairment in MTN Guinea Conakry, MTN Syria and Afrihost as well as the effects of withholding taxes incurred. The Group s reported taxation charge decreased by 26,3%** (27,5%*) to R8 346 million for the period. This was a result of lower current tax due to lower profit before tax in 2016, lower withholding tax due to lower dividends up-streamed via MTN Mauritius and a higher deferred tax credit as a result of an assessed loss and foreign tax credit in MTN Mauritius. EARNINGS/LOSSES The Group reported a basic headline loss per share of 77 cents** largely impacted by the Nigerian regulatory fine. Excluding this impact in both years, HEPS declined 63,2% to 423 cents. The attributable loss per share was 144 cents**, from attributable earnings per share of cents in the prior year. CASH FLOW Cash inflows from operations decreased by 3,3% to R million**. This was mainly as a result of the Nigeria payment on the regulatory fine of R5 870 million, which was offset by an increase in working capital movements. Dividend payments of R million to equity holders, dividend payments of R1 178 million** to minorities and tax payments of R million** also affected cash flows. Group cash capex amounted to R million** and included the purchase of a 4G licence and spectrum in Ghana (R973 million), a LTE and fibre licence in Congo-Brazzaville (R266 million) and a Nigeria spectrum licence (R1 396 million). MTN Group Limited financial results for the year ended 31 December

24 Results overview continued CAPITAL EXPENDITURE Table 9: Capital expenditure Actual (Rm) Prior (Rm) Reported % change Organic % change South and East Africa (4,1) (2,3) South Africa ,3 1,3 Uganda (20,3) (23,7) Other (32,2) (14,5) West and Central Africa ,4 66,3 Nigeria ,3 130,6 Ghana ,0 15,9 Cameroon ,3 1,2 Ivory Coast ,6 84,9 Other ,7 7,4 Middle East and North Africa ,1 46,0 Syria ,7 67,9 Sudan ,1 77,0 Other (9,9) (13,2) Head office companies and eliminations Total ,6 28,7 Hyperinflation Total reported ,1 27,6 Capex increased 19,6% (28,7%*) to R million, of which R2 654 million was related to foreign currency movements. 22 MTN Group Limited financial results for the year ended 31 December 2016

25 RESULTS OVERVIEW FINANCIAL POSITION Table 10: Net debt analysis (Rm) Cash and cash equivalents* Interest - bearing liabilities Net debt/ (cash) Net debt/ (cash) December 2015 SEA (476) (1 652) South Africa (2 023) (1 507) Uganda (86) Other (59) WECA Nigeria (1 107) Ghana Cameroon Ivory Coast Other (271) MENA (748) (585) Syria 843 (843) (1 525) Sudan Other (1 150) (949) Head office companies and eliminations Total reported Iran (49%) (6 036) (5 342) * Includes restricted cash and current investments Net debt increased to R million** compared to net debt of R million** reported at the end of December The Group reported a net debt/ebitda ratio of 1,01 excluding the Nigerian regulatory fine. The net debt position at the end of the year was mainly impacted by the following: Nigeria regulatory fine payment of R5 870 million**; Dividend paid to minority shareholders of R1 178 million**; An increase in cash capital expenditure and licences of R million**; Investments made mainly in Amadeus (TravelStart), the Autopage acquisition, and cash paid to AIH on capital calls of R1 867 million**. MTN Group Limited financial results for the year ended 31 December

26 Results overview continued OPERATIONAL REVIEW: SEA Subscribers increased by 3,6% to 54,7 million Revenue increased by 7,9%* Data revenue increased by 14,5%* South Africa Subscribers increased by 0,6% to 30,8 million Revenue increased by 4,7% Service revenue increased by 1,9% Data revenue increased by 11,4% EBITDA margin declined by 0,5 pp to 32,9% MTN South Africa showed a positive turnaround in the second half of the year, benefiting from improved 3G and LTE network quality and aggressive sales of smartphones. The operation s subscriber base increased by 0,6% to 30,8 million, driven by the pre-paid segment, which increased its base by 0,9% to 25,6 million. The number of post-paid subscribers declined by 1,1% to 5,2 million, largely impacted by network quality challenges experienced, systems and customer service issues in the first half of Total revenue increased by 4,7% to R million mainly as a result of device revenue. Service revenue, which excludes device revenue, increased by 1,9% for the period, driven by good growth in data revenue. Data revenue increased by 11,4%, contributing 34% to total revenue. The number of smartphones on the network increased by 15,3% (December 2015: 9,1 million restated to align to the Group definition) to 10,5 million while the number of megabytes per user increased 46,7% for the period. Digital revenue gained momentum and contributed 16% to data revenue. This was attributable to local and international content. MTN South Africa s EBITDA margin declined by 0,5 pp to 32,9%. This was impacted by foreign exchange losses on the cost of devices, as well as an increase in the number of smartphones and the change in the device mix from 2G to 3G and LTE. This was further impacted by costs related to the expansion of our 3G and LTE network and increased marketing costs. However, the operation reported a 5,4 pp improvement in EBITDA margin in the second half of 2016 versus the first half. Capex increased by 1,3% to R million for the year, and retained a strong focus on 3G and LTE network investment. The operation rolled out co-located 3G sites and LTE sites. MTN South Africa s net promoter score (NPS) gained significantly in the fourth quarter of the year compared to the first half, increasing by 8 pp, mainly driven by value and service. Fibre to the home connections remain a priority with approximately homes passed for the period. In addition, the Smart Village acquisition was completed in December 2016, adding homes passed to the network with approximately homes connected. 24 MTN Group Limited financial results for the year ended 31 December 2016

27 RESULTS OVERVIEW Other SEA across the rest of the region the number of subscribers increased by 7,7% to 24,0 million, largely the result of a solid recovery in MTN Uganda s subscriber growth in the second half of the year. MTN Uganda increased its subscriber base by 18,1% to 10,5 million. This was mainly attributable to the reconnection of previously disconnected subscribers, who were disconnected during the subscriber registration process in the second half of The performance was supported by new acquisitions on the all-net call per second price plan, segmented value propositions and a decline in churn. Market share grew to 53,3% from 51,1%. Total revenue declined by 1,9%*, led lower by a decrease in outgoing and incoming voice revenue. This was mainly impacted by the disconnection of subscribers in 2015 as well as the East African Community s One Network Area, which means that all calls between member countries are billed as though they were local. Data revenue increased by 18,8%* and contributed 34% to total revenue. This was supported by attractive data bundles with increased data usage, below-the-line campaigns and a LTE SIM swap campaign to drive LTE adoption and penetration. Digital revenue contributed 71% to data revenue, supported mainly by mobile financial service revenue. E-commerce products, such as mobile advertising, and MTN Class which is a value-added service product in education, also contributed positively to digital revenue. The number of MTN Mobile Money active customers increased 12,4% to 4,1 million, as a result mainly of the introduction of savings and loan products. The launch of MoKash recorded approximately one million customers in under six months. MTN Uganda s EBITDA margin decreased by 4,9 pp to 29,6%, impacted by once-off subscriber registration costs and an inventory impairment charge as well as higher maintenance and tower leasing costs. Capex decreased by 23,7%* to R758 million. During the period, 375 co-located 3G and 110 LTE sites were rolled out. These sites were rolled out as upgrades to existing sites, which will provide future cost efficiencies as well as improving the quality and capacity on the network. NPS increased 3,5 pp in the fourth quarter of 2016 from 11,7% in the same quarter of WECA Subscribers increased by 5,0% to 111,9 million Revenue decreased by 0,3%* Data revenue increased by 22,8%* Nigeria Subscribers increased by 1,2% to 62,0 million Revenue decreased by 1,4%* Data revenue increased by 10,8%* EBITDA margin declined by 6,6 pp to 46,4% (excluding the impact of the fine) MTN Group Limited financial results for the year ended 31 December

28 Results overview continued MTN Nigeria showed a meaningful improvement in the second half following regulatory challenges earlier in the year. The operating environment continued to be difficult with the contraction of the economy impacting consumer spending. However, we increased our subscriber base by 1,2% to 62,0 million, and grew our market share to 48,0% from 44,8%. This was mainly due to the reconnection of previously disconnected subscribers as well as the aggressive drive to secure new connections with the MTN StartPack tariff plan. MTN Nigeria was voted the Most Valued Brand in Nigeria for 2016 in the Top 50 Brands Survey measured on key indicators such as customers brand awareness, network quality, market category leadership, innovation, spread and corporate social responsibility. Total revenue declined by 1,4%* impacted by regulatory challenges resulting in lower average subscribers and the impact of delays in competitive offerings during the first half of the year. Data revenue increased by 10,8%* and contributed 21% to total revenue, supported by competitive customised data offerings, the quality of the LTE network and the introduction of new data bundle plans, which allows eligible customers to borrow data on credit and pay it back at their next recharge. The number of smartphones on the network increased by 36,1% to 20,4 million. Digital revenue contributed 61% to data revenue mainly as a result of MTN Music+ (a converged music streaming and download platform), supported by the youth segment. MTN Nigeria s active Mobile Money subscribers increased by over 100% to 1,6 million. The EBITDA margin declined by 6,6 pp to 46,4% excluding the impact of the Nigerian regulatory fine. This was mainly as a result of foreign currency challenges relating to US dollar-denominated expenses such as towers and site leasing. The operation rolled out G sites and LTE sites in the year. Capex increased by more than 100%* to R8 701 million, focused on LTE rollout. MTN Nigeria more than doubled its NPS in the fourth quarter of 2016 versus the fourth quarter of Other WECA the remainder of the region increased its subscriber base by 10,2% to 49,9 million, led by strong growth in Ghana and Ivory Coast. MTN Ghana grew its subscriber base by 18,7% to 19,3 million, driven by attractive value propositions, which contributed to its market share expanding to 56,4% from 52,2% at 31 December Total revenue increased by 19,8%*, largely attributable to solid growth in data, outgoing voice revenue and digital lifestyle-based services. Data revenue grew by 65,7%* and contributed 42% to total revenue, driven by expansion of network quality and coverage, increased distribution and marketing of low-cost smartphones, the introduction of higher spectrum technology and falling tariffs. There has been uptake in data usage supported by lifestyle bundles, specifically for social networks access, as well as new data bundles introduced with the launch of 4G. The number of smartphones on the network increased by 64,4% to 5,3 million. 26 MTN Group Limited financial results for the year ended 31 December 2016

29 RESULTS OVERVIEW Digital revenue contributed 48% to data revenue and was supported by mobile financial services, lifestyle-based services, rich video and MTN Music. MTN Mobile Money active subscribers increased by 79,4% to 5,7 million, supported by strong regional innovation and marketing. The EBITDA margin increased marginally by 0,2 pp to 40,7% despite increased tower leasing costs and utilities, impacted by the depreciation of the cedi and high inflation. The operation continued to successfully implement cost control initiatives. Capex increased by 15,9%* to R2 435 million prioritising improved quality. The operation added 226 co-located 3G and 475 LTE sites during the period. The increase in the net promoter score was mainly driven by value and products. MTN Cameroon increased its subscriber base by 7,5% to 9,9 million mainly as a result of aggressive subscriber registration campaigns as well as a reduction in churn following retention campaigns. Total revenue decreased by 6,7%* because of a decline in outgoing voice revenue, impacted in turn by a decrease in the effective tariff as well as free minutes used in relation to the subscriber registration process and below-the-line activities. This was offset by a 25,9%* increase in data revenue that contributed 19% to total revenue, supported by an increase in data usage due to higher sales of specific data bundles. The expansion of 3G and LTE networks supported data growth. The number of smartphones on the network for the period was 1,3 million. Digital revenue contributed 21% to data revenue, supported by the lifestyle segment, MTN Play and the ringtone customisation tool MTN Zik. The number of active MTN Mobile Money subscribers increased by over 100% to MTN Cameroon s EBITDA margin decreased by 2,8 pp to 33,4% mainly as a result of costs relating to subscriber registration campaigns. Several cost-reduction initiatives were also implemented during the period. Capex increased 1,2%* to R2 166 million with a focus on 3G and LTE network coverage and quality. Enhanced data throughput speeds, together with transmission link capacity, improved the customer experience. During the period the operation rolled out 463 co-located 3G sites and 267 LTE sites. MTN Ivory Coast increased its subscriber base by 13,6% to 9,5 million mainly as a result of strong churn management. Total revenue decreased by 2,0%* because of lower outgoing voice revenue impacted by a drop in the effective tariff. This was partially offset by an 18,4%* increase in data revenue, which contributed 19% to total revenue. This was mainly as a result of increased data usage supported by WiMax swaps to LTE, residential offerings as well as LTE time division duplex (TDD) devices. The number of smartphones on the network increased by over 100% to 2,1 million. The increase in the net promoter score was largely as a result of the Perfect 10 initiative launched in the operation to boost customer experience. MTN Group Limited financial results for the year ended 31 December

30 Results overview continued The operations EBITDA margin declined by 1,7 pp to 32,5% mainly driven by provision for doubtful debts. Capex over 100%* to R1 721 million with a strong focus on network coverage and densification. During the period the operation rolled out 512 co-located 3G sites and 343 LTE sites. MENA Subscribers increased by 0,9% to 73,7 million Revenue increased by 3,8%* (excluding Iran) Data revenue increased 33,9%*(excluding Iran) Other MENA in the remainder of the region, the subscriber base declined by 3,0% to 26,1 million. MTN Sudan s subscriber base contracted by 11,5% to 7,5 million as a result of the disconnection of subscribers in compliance with subscriber registration requirements. Total revenue increased by 18,8%* mainly as a result of strong outgoing voice, supported by a tariff increase implemented in June. Data revenue grew by 56,6%* and contributed 29% to total revenue, driven by attractive belowthe-line campaigns and improved network quality. The number of data users increased 4,7% to 4,0 million. Digital revenue contributed 19% to data revenue. MTN Mobile Money remains a key opportunity area and a launch in collaboration with the Central Bank is imminent. The EBITDA margin decreased by 2,9 pp to 32,1%. Capex for the period amounted to R1 549 million. MTN Syria reported a 1,6% increase in its subscriber base to 6,1 million despite a very challenging environment. Total revenue increased by 20,3%* mainly because of outgoing voice and data revenue, supported by below-the-line campaigns and regional offers. Data revenue increased by 26,9%* and contributed 29% to total revenue, supported by an increase in network availability. The EBITDA margin increased by 14,8 pp to 32,5%. Capex for the period amounted to R1 049 million. IRAN (JOINT VENTURE, EQUITY ACCOUNTED, 49%) Subscribers increased by 3,2% to 47,6 million Revenue increased by 12,8%* Data revenue increased 58,8%* EBITDA margin decreased by 2,5 pp to 39,0% MTN Irancell delivered a strong performance despite regulatory pressure on data tariffs. The number of subscribers increased by 3,2% to 47,6 million mainly as a result of competitive segmented voice and data offerings, including attractive data bundles, and a superior quality 3G and LTE network. Improved customer experience resulted in a higher NPS of 22%. 28 MTN Group Limited financial results for the year ended 31 December 2016

31 RESULTS OVERVIEW Total revenue increased by 12,8%*, driven by increased data revenue growth. Outgoing voice revenue declined marginally by 0,7%*, cannibalised by data services. Data revenue increased by 58,8%*, underpinned by optimisation of data bundles, modernisation of 2G and 3G sites and expansion of the LTE network. Smartphone penetration in Iran remains the highest across our footprint with MTN Irancell recording 26,1 million smartphones on the network at the end of the year. Data revenue contributed 42% to total revenue while outgoing voice revenue contributed 37%. Digital revenue contributed 30% to data revenue, supported by an increase in local content-based usage. The EBITDA margin decreased by 2,5 pp to 39,0% as a result of increased transmission costs attributable to additional capacity requirements. Capex for the period increased by 15,0%* to R5 138 million as the operation added co-located 3G sites and LTE sites. MTN Group Limited financial results for the year ended 31 December

32 Results overview continued DECLARATION OF FINAL ORDINARY DIVIDEND Notice is hereby given that a gross year-end dividend of 450 cents per share for the period 31 December 2016 has been declared payable to MTN shareholders. The number of ordinary shares in issue at the date of this declaration is (including treasury shares held by the MTN Holdings and shares held by MTN Zakhele Futhi). The dividend will be subject to a maximum local dividend tax rate of 20% which will result in a net dividend of 360 cents per share to those shareholders who bear the maximum rate of dividend withholding tax of 90 cents per share. The net dividend per share for the respective categories of shareholders for the different dividend tax rates is as follows: 0% 450 cents per share 5% 427,50 cents per share 7,5% 416,25 cents per share 10% 405 cents per share 12,5% 393,75 cents per share 15% 382,50 cents per share These different dividend tax rates are a result of the application of tax rates in various double taxation agreements as well as exemptions from dividend tax. MTN Group Limited s tax reference number is 9692/942/71/8. In compliance with the requirements of Strate, the electronic settlement and custody system used by the JSE Limited, the salient dates relating to the payment of the dividend are as follows: Declaration date Thursday, 2 March 2017 Last day to trade cum dividend on the JSE Monday, 20 March 2017 First trading day ex dividend on the JSE Wednesday, 22 March 2017 Record date Friday, 24 March 2017 Payment date Monday, 27 March 2017 No share certificates may be dematerialised or re-materialised between Wednesday, 22 March 2017 and Friday, 24 March 2017, both days inclusive. On Monday, 27 March 2017, the dividend will be transferred electronically to the bank accounts of certificated shareholders who make use of this facility. In respect of those who do not use this facility, cheques dated Monday, 27 March 2017 will be posted on or about this date. Shareholders who hold dematerialised shares will have their accounts held by the Central Securities Depository Participant or broker credited on Monday, 27 March Any forward-looking information contained in this announcement has not been audited or reviewed and reported on by the company s external auditors. For and behalf of the Board PF Nhleko Executive Chairman 1 March 2017 Fairland 30 MTN Group Limited financial results for the year ended 31 December 2016

33 Page header for the year ended 31 December AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016 The Group s audited summary consolidated financial statements have been independently audited by the Group s external auditors. The preparation of the Group s audited summary consolidated financial statements was supervised by the acting Group chief financial officer, G Engling, BCom, BCompt (Hons), CA(SA). The results were made available on 2 March 2017.